A local newspaper reported that Indonesia wants South Korea to buy four CN-235 maritime patrol and transport aircraft in return for its purchase of South Korea's indigenous T-50s.
"(South) Korea's coast guard already purchased four CN-235 planes in 2008 based on our needs," Kim Hee-jung, spokeswoman for South Korean President Lee Myung-bak, said. "I can assure you there is no barter deal of any kind."
Indonesia's CN-235 is a medium-range, twin-turboprop aircraft developed and built by Spain's CASA and PT Dirgantara Indonesia, formerly called IPTN.
South Korea has 20 CN-235 aircraft, most of them built in Spain. But eight were built in Indonesia and Seoul purchased those under a barter deal in 2001 in return for selling Jakarta 12 KT-1 Woongbi basic trainers.
The KT-1 is a South Korean-made, single-engine turboprop developed by Korea Aerospace Industries and the Agency for Defense Development. The KT-1 is the first completely indigenous South Korean aircraft. It first flew in 1991 and was inducted for South Korean military use in 2000.
Speculation arose about the T-50 and CN-235 barter deal after South Korea's Ministry of National Defense said Jakarta informed Seoul that KAI, manufacturer of T-50 Golden Eagles, will be named the preferred bidder.
If KAI is officially confirmed, it will be South Korea's first export of the jets, which were developed in conjunction with Lockheed Martin. Lockheed financed 13 percent of the aircraft's development, KAI put in 17 percent and the South Korean government financed the rest.
Lockheed Martin Aeronautical Systems and KAI created the T-50 International Co., known as TFIC, to pursue export markets outside South Korea.
The T-50s will replace Indonesia's 38 aging BAE Systems Hawk 53 trainers. More than 900 were made, first by Hawker Siddeley from 1974-77, then by British Aerospace from 1977-99 before BAE Systems MAS division bought the business.
Other bidders for the deal are the Aero Vodochody L-159 and Yakovlev Yak-130.
"Now that we have been selected as the preferred bidder, real negotiations on price and other terms will begin," Kim Min-seok, spokesman of the Defense Ministry, said.
Even with Lockheed's financial help and engineering expertise, the aircraft has come in for criticism for its price of around $25 million -- up to 20 percent more expensive than competitors' aircraft. The high unit cost holds back export sales of the plane whose development over 13 years cost around $1.8 billion, critics say.
"Until now, the media has reported that the (Indonesian) deal will be worth $400 million, but I can't say it's accurate," KAI President Kim Hong-kyung said. "The price will be determined based on negotiations. If negotiations proceed quickly, they can be concluded within a month or two, but it may take longer. I'd love to see fast progress."
The expected delivery date is 2013.
The next step for Indonesia and South Korea is for up to four months of contract and price negotiations with KAI, which likely will include some production of the T-50 in Indonesia.
South Korea has tried to export the jets, which can be upgraded and used as light tactical multi-role fighters.
The United Arab Emirates and Singapore have been interested in the plane in the past. Efforts will be made to sell T-50s to Israel, Poland and the United States, KIA's Kim said.
Importantly, the T-50 training systems are designed to enable a smooth transition to more advanced fighters including the F-22 Raptor, F-35 Lightning II and the F-16 Fighting Falcon -- of which Indonesia has 10 and also which may be due for upgrades.
The two-seater T-50 is an early 1990s design, based on the Lockheed Martin F-16 Fighting Falcon, the trainer developed for future pilots of the F-16, which is used by South Korea.
The T-50 uses a General Electric F404 turbofan engine producing 17,700 pounds of thrust for a maximum speed of Mach 1.4 to 48,000 feet altitude. The range is around 1,150 miles.